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HomeMy WebLinkAboutEscrow/Waterworks Bonds 0f 2003/UtilESCROW AGREEMENT APPROVED, A,~.3'O FORM BY:~ BETWEEN THE CITY OF CARMEL, INDIANA AND NATIONAL CITY BANK OF INDIANA As Escrow Trustee WATERWORKS REFUNDING REVENUE BONDS OF 2003, SERIES A Dated April 22, 2003 ESCROW AGREEMENT This agreement (the "Escrow Agreement") made and entered into as of April 22, 2003, by and between the City of Carmel (the "Issuer"), a municipal corporation existing under the laws of the State of Indiana, by and through its Board of Public Works and Safety, and National City Bank of Indiana (the "Escrow Trustee"), a nationa! banking association organized under the laws of the United States of America, having its principal corporate trust office in Indianapolis, Indiana, as Escrow Trustee under this Escrow Agreement with the Issuer. WITNESSETH WHEREAS, Indiana Code, Title 5, Article 1, Chapter 5 (the "Act"), has been enacted by the legislature of Indiana; and WHEREAS, the Act declares that the refunding of bonds to effect a savings for the Issuer or to relieve the Issuer of restrictive covenants which impede additional financings and the issuance of refunding bonds to accomplish the refunding constitute a public purpose; and WHEREAS, the Act provides that the proceeds of the refunding bonds may be secured by a trust agreement between the Issuer and a corporate trustee; and WHEREAS, the execution and delivery of this Escrow Agreement has been in all respects duly and validly authorized by Ordinance No. D1622-03 duly passed and approved by the Common Council and signed by the Mayor of the Issuer on March 17, 2003, (collectively, the "Ordinance"); and WHEREAS, the Issuer has heretofore issued, pursuant to Ordinance A-67 adopted on December 7, 1992 (the "1993 Ordinance"), its Waterworks Revenue Bonds of 1993, Series B dated May 1, 1993, (the "1993 Bonds"), in the total amount of $5,010,000 of which $280,000 and $3,960,000 in principal amount (respectively, the "Current Bonds" and the "Refunded Bonds") are now outstanding (collectively, the "Outstanding 1993 Bonds"); and WHEREAS, the Issuer has concurrently with the execution and delivery of this Escrow Agreement, executed, issued and delivered pursuant to the Ordinance, its Waterworks Refunding Revenue Bonds of 2003, Series A (the "2003 Bonds") in the amount of $4,005,000.00, and the Issuer has deposited with the Escrow Trustee cash from the proceeds of the Bonds in the amount of $3,538,069.94 and funds on hand in the amount of $350,754.70 from the principal and interest account and $543,281.00 from the debt service reserve account (collectively, the "Cash Requirement") in a total amount of $4,432,105.64, which is sufficient to pay the accrued interest on and principal of the outstanding 1993 Bonds from the date of delivery of the 2003 Bonds to May 1, 2003, the maturity date of the Current Bonds and the earliest date on which the Refunded Bonds may be redeemed, with redemption premiums thereon, thereby defeasing the Outstanding 447235_6.floc 1 1993 Bonds so that they are no longer deemed outstanding or entitled to the pledge of the Net Revenues (as defined in the Ordinance) of the Issuer's waterworks. NOW THEREFORE, THIS AGREEMENT WITNESSETH: That in order to secure the payment of the principal of and interest and redemption premium, if any, on the Outstanding 1993 Bonds according to their tenor, purport and effect, and in order to secure the performance and observance of all the covenants and conditions herein and in the Current Bonds, the Refunded Bonds and 2003 Bonds, and for and in consideration of the mutual covenants herein contained, and of the acceptance by the Escrow Trustee of the trust hereby created, the Issuer has executed and delivered this Escrow Agreement. TO HAVE AND TO HOLD the same unto the Escrow Trustee, and its successor or successors and its or their assigns forever; IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth, to secure the payment of the Outstanding 1993 Bonds upon redemption and premium, if any, payable upon redemption and the interest payable thereon, and to secure also the observance and performance of all the terms, provisions, covenants and conditions of this Escrow Agreement, and for the equal and ratable benefit and security of all and singular the owners of all Outstanding 1993 Bonds without preference, priority or distinction as to lien or otherwise of any one Current Bond or Refunded Bond or as between principal and interest; and it is hereby mutually covenanted and agreed that the terms and conditions upon which the Outstanding 1993 Bonds are to be paid and redeemed, and a portion of the proceeds of the 2003 Bonds invested, and the trusts and conditions upon which the pledged Cash Requirement is to be held and disbursed, are as follows: 1. Upon closing on the 2003 Bonds, the Escrow Trustee shall acknowledge receipt from the Issuer of the Cash Requirement, to be applied on the principal of, interest and redemption premium, if any, on the Outstanding 1993 Bonds in accordance with the schedule set forth in Exhibit A attached hereto. The Cash Requirement will be available and sufficient to pay the principal of, interest on the Current Bonds through May 1, 2003, and to redeem all the then outstanding Refunded Bonds on May 1, 2003 (the earliest date on which the Refunded Bonds may be called for redemption prior to maturity) at a redemption price equal to 102% of the principal amount with accrued interest to that date. 2. (a) A Trust Account is created hereby for the Refunded Bonds (the "Trust Account"). For purposes of securing payment for the Outstanding 1993 Bonds, the Cash Requirement will be held in trust by the Escrow Trustee in the Trust Account on deposit with the Escrow Trustee, including interest to be earned thereon, if any, together with the Cash Requirement, are pledged solely and irrevocably for the benefit of the owners of the Current Bonds and the Refunded Bonds. Pursuant to this Section, the Issuer irrevocably instructs the Escrow Trustee to duly call the Refunded Bonds for redemption on May 1, 2003, and the Escrow Trustee hereby agrees to follow this instruction. 447235_6.doc 2 (b) The Escrow Trustee and the Issuer agree to pay the interest on and the principal of the Outstanding 1993 Bonds and to redeem on May 1, 2003, all the then outstanding Refunded Bonds. The Escrow Trustee and the Issuer shall complete the notice attached as Exhibit B and mail the notices at least thirty (30) days prior to May 1, 2003, substantially in the form attached to this Escrow Agreement as Exhibit B. The Escrow Trustee shall, with the cooperation of the Issuer, transfer funds to the paying agent for the 1993 Bonds to effectuate timely payments under this Escrow Agreement. (c) Any balance remaining in the Trust Account after redemption or payment at maturity of all the Current Bonds and the Refunded Bonds, shall be deposited with the Issuer and used by the Issuer to pay debt service on the 2003 Bonds. (d) The mathematical calculations of the adequacy of the Trust Account to fully provide for all payments enumerated in this Escrow Agreement will be computed at the time of delivery of the 2003 Bonds by H.J. Umbaugh & Associates LLP (the "Verification Report"). 3. The Issuer covenants that the proceeds from the sale of 2003 Bonds, any moneys attributable to the proceeds of the 2003 Bonds, amounts received from the investment of the proceeds of the 2003 Bonds, any other amounts treated as proceeds of the 2003 Bonds under the applicable provisions of the Internal Revenue Code of 1986 as existing on the date of the issuance of the 2003 Bonds (the "Code"), to the extent applicable to the 2003 Bonds or held in funds or accounts under the 1993 Ordinance or the Ordinance, shall not be invested or otherwise used in a manner which would cause the 2003 Bonds, the Current Bonds or the Refunded Bonds to be "arbitrage bonds" within the meaning of the Code and the regulations and rulings promulgated thereunder. 4. The Escrow Trustee hereby accepts the trusts imposed upon it by this Escrow Agreement and agrees to perform these trusts as a corporate trustee ordinarily would perform such trusts under a corporate indenture. The Escrow Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers or employees but shall not be answerable for the conduct of the same if appointed in accordance with the standard specified above, and shall be entitled to advice of counsel concerning all compensation to all such attorneys, certified public accountants, agents, receivers and employees as may reasonably be employed in connection with the trusts hereof. The Escrow Trustee may act upon the opinion or advice of any attorney (who may be the attorney or attorneys for the Issuer). The Escrow Trustee shall not be responsible for any loss or damage resulting from any action or non-action in good faith in reliance upon such opinion or advice. The Escrow Trustee shall be entitled to payment and/or reimbursement in accordance with the schedule attached hereto as Exhibit C in connection with services under this Escrow Agreement including costs incurred under the preceding paragraph. Such fees shall not constitute a lien against the Trust Account. If, after the Outstanding 1993 Bonds are paid, there 447235_6.doc 3 are insufficient funds to pay such fees, the Issuer is responsible for the payment of such Escrow Trustee fees and paying agent fees. 5. The Escrow Trustee shall have the power to sell, transfer, request the redemption or otherwise dispose of some or all of the securities, if any, in the Trust Account and to substitute other securities, if any, of equal or greater security identified in the Verification Report therefor provided that the Escrow Trustee shall receive the unqualified opinion of nationally recognized municipal bond attorneys prior to any such actions to the effect that such disposition and substitution would not cause any of the Refunded Bonds or the 2003 Bonds to be an "arbitrage bond" within the meaning of Section 148 of the Code, or any other regulations and rulings to the extent applicable to the Refunded Bonds of the 2003 Bonds; and furthermore, provided that the Escrow Trustee shall received the unqualified opinion of a certified public accountant or a firm of certified public accountants to the effect that such disposition and substitution shall not reduce the sufficiency and adequacy of the Trust Account to fully provide for all payments enumerated in this Escrow Agreement. 6. This Escrow Agreement is made for the benefit of the Issuer and the holders from time to time of the Outstanding 1993 Bonds, and it shall not be repealed, revoked, altered or amended without the written consent of all such holders, the Escrow Trustee and the Issuer, provided, however, that the Issuer and the Escrow Trustee may, without the consent of, or notice to, such holders, amend this Escrow Agreement or enter into such agreements supplemental to this Escrow Agreement, in their sole judgment and discretion, as shall not materially adversely affect the rights of such holders, for any one or more of the following purposes: (i) to cure any ambiguity or formal defect or omission in this Escrow Agreement; (ii) to grant to, or confer upon, the Escrow Trustee for the benefit of the holders of the Current Bonds and the Refunded Bonds, any additional rights, remedies, powers, security or authority that may lawfully be granted to, or conferred upon, such holders or the Escrow Trustee; and (iii) to include under this Escrow Agreement additional funds, securities or properties. 7. If any one or more of the covenants or agreements provided in this Escrow Agreement on the part of the Issuer or the Escrow Trustee to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenants or agreements shall be null and void and shall be deemed separate from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Escrow Agreement. 8. This Escrow Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. 9. This Escrow Agreement shall be construed and enforced under the laws of the State of Indiana, without regard to conflict of law principles. 447235_6.doc 4 10. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Escrow Agreement, shall be a legal holiday or a day on which banking institutions in the city in which is located the principal office of the Escrow Trustee are authorized by law to remain closed, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are authorized to remain closed, with the same force and effect as if done on the nominal date provided in this Escrow Agreement, and no interest shall accrue for the period after such nominal date. 11. This Escrow Agreement shall not be assigned by the Escrow Trustee or any successor thereto without the prior written consent of the Issuer. 447235_6.doc 5 IN W1TNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be executed for and on their behalf the day and year first hereinabove written. CITY OF CARMEL, by and through its Board of Public Works and Safety Date: ~me s B r~n_ar~ ~re s kt~g.~ f fi c~r B y: M~art~ B~'~7-,'{-/A~ Date: r y fia ~..~..~r~.~.e,_~b e ~' By: Date: Attest: / Diana L. Cordray, leAMC, Clerk-Treasurer Date: ~'~/0' O~ 447235 6.doc 6 IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be executed for and on their behalf the day and year first hereinabove written. NATIONAL CITY BANK OF INDIANA By: Patti. G. Wade, Trust Officer (SEAL) Attest: 4472356.doc 7 EXHIBIT A Date 05/01/03 Principal $4,240,000.00 Interest $112,905.64 Redemption Premium $79,200.00 Total Payment $4,432,105.64 447235_6.doc A- 1 EXHIBIT B CONDITIONAL NOTICE OF REDEMPTION TO THE HOLDER OF THE CITY OF CARMEL WATERWORKS REVENUE BONDS OF 1993, SERIES B Dated: May 1, 1993 NOTICE IS HEREBY GIVEN to the registered owners of the Waterworks Revenue Bonds of 1993, Series B, maturing on and after May 1, 2004 (the "1993 Bonds"), issued by the City of Carmel (the "Issuer"), that the 1993 Bonds shall be redeemed on May 1, 2003, at the price of one hundred two percent (102%) of the par amount thereof (the "Redemption Price"), plus accrued and unpaid interest to May 1, 2003. The 1993 Bonds to be redeemed are as follows: Principal Interest Maturity Date Amount Rate May 1, 2004 $ 300,000 5.30% May 1, 2005 315,000 5.30% May 1, 2006 335,000 5.30% May 1, 2007 355,000 5.30% May 1, 2008 375,000 5.30% May 1, 2009 400,000 5.30% May 1, 2010 425,000 5.30% May 1, 2011 455,000 5.375% May 1, 2012 485,000 5.375% May 1, 2013 515,000 5.375% Payment of the Redemption Price of and accrued interest on the 1993 Bonds will be made upon presentation and surrender of the 1993 Bonds at the corporate trust operations office of the National City Bank of Indiana, Indianapolis, Indiana 46255, Attention: Corporate Trust Department. The 1993 Bonds will cease to bear interest on May 1, 2003, whether or not presented for payment on that date. Notwithstanding anything above, this Notice is conditional upon the Issuer closing on its proposed Waterworks Refunding Bonds of 2003, Series A ("Refunding Bonds") anticipated to occur on or before April 22, 2003. In the event the Issuer does not issue its Refunding Bonds, this Notice will be revoked on or before May 1, 2003. 447235_6.doc B- 1 Dated: On or before IMPORTANT: The provisions of the Interest and Dividend Tax Compliance Act of 1983 (the "Act") require each holder of the 1993 Bonds to submit its taxpayer identification number (either such holder's social security number, 1RS individual taxpayer identification number or employer identification number, as appropriate) or payee exemption certificate with each note presented for payment. Failure to comply with the Act may subject the payment of the Redemption Price to the withholding of 31% thereof. To avoid being subject to such withholding, each holder of the 1993 Bonds should submit an IRS Form W-9 or payee exemption certificate at the time the notes are presented for payment. 447235_6.doc B-2 EXHIBIT C ESCROW TRUSTEE FEES National City Bank of Indiana as Escrow Trustee for: City of Carmel, Indiana Waterworks Revenue Bonds of 1993, Series B The Escrow Trustee fees and expenses in paying the 1993 Bonds are $375.00. nn?235_6.aoc C- 1